Most of the real estate empire that developer Richard M. Osborne says he has spent 50 years amassing soon won't be his if it's snapped up in auctions he has agreed to in order to pay off a bank and resolve the bankruptcies of three of his companies.

Between two planned auctions, more than 200 of Osborne's properties — much of it in Lake County — will be for sale as part of a proposed agreement to settle debts that he and his entities owe to RBS Citizens.

Seventeen properties valued at more than $11 million are to be auctioned this Wednesday, April 30, at the Crowne Plaza Hotel in Independence. They include a 453-space parking garage near the new Cleveland Convention Center, roughly 120 agricultural acres in Chardon and several commercial properties.

It is the largest dollar-volume commercial real estate auction scheduled for Northeast Ohio that Hanna Chartwell executives can recall.

“Not a lot of people own as much property as Mr. Osborne does, so that makes it unique,” said Mac Biggar, president of Hanna Chartwell, the commercial brokerage arm of Howard Hanna that conducts auctions.

“There will be some bargains to be had,” Biggar said, noting that Osborne's vacant properties are available for “greatly reduced prices.”

The second auction, which will take place on May 31, will put on the block some 220 industrial, commercial and residential parcels Osborne owns, according to Biggar and Osborne.

Auction proceeds will be used first to extinguish any liens on the properties, then to pay RBS Citizens, a creditor of three of Osborne's companies that filed bankruptcy two years ago.

If the properties sell, Osborne estimates he'll be left with 20 or 30 properties.

“I have a lender that I have to pay off (and) that's probably the best way to do it,” he said.

The impending auctions are included in a proposed settlement agreement filed in U.S. Bankruptcy Court in the Western District of Pennsylvania in the bankruptcy cases of Oz Gas Ltd., Great Plains Exploration LLC and John D. Oil & Gas Co.

The companies filed for Chapter 11 bankruptcy protection in January 2012, stating their financial difficulties were a direct result of the drop in the price of natural gas. RBS Citizens, which had lent the companies approximately $30 million, required that the loans be less than 65% of the companies' reserves, and as a result of the decline in natural gas prices, that requirement was not met, according to court records.

At the time of the bankruptcy petitions, RBS claimed the total balance due on the companies' notes was about $30 million. Since then, RBS has been paid about $15 million, and claims it now is owed $17 million to $19 million, according to Robert S. Bernstein, managing partner at Bernstein-Burkley P.C., the Pittsburgh-based law firm representing Osborne's companies.

Per a filing on March 19, RBS has agreed to accept $10.8 million in full and complete settlement of each and every claim against the debtors if it receives the entire amount on or before June 30. The filing does set forth terms of possible extension through Sept. 30.

Now, the companies await a bankruptcy judge's action on a motion they filed to approve the agreement between them, Osborne, RBS and other entities, pursuant to which Hanna Chartwell is to sell off real estate to pay RBS and allow the companies to reorganize and continue their business.

'They put me in trouble'

In addition to Lake County, the properties to be auctioned are in Cuyahoga, Ashtabula, Richland, Portage, Summit and Geauga counties, per a listing agreement filed with the court.

Meanwhile, 11 Lake County properties, which have an appraised value topping $900,000 and are ascribed to Osborne or an Osborne trustee, are headed for sheriff sale in May.

When it comes to some properties he's “let go” to sheriff's sale, Osborne said he didn't have the money to pay the taxes.

Buyers in the auctions will receive properties free and clear of any liens, Biggar said. Osborne is not permitted to bid in either auction, he noted.

Osborne has made other efforts to pay down the money he said he borrowed from RBS Citizens for oil and gas exploration: Crain's reported in July 2012 that he sold roughly 800,000 shares of Gas Natural Inc., the company he leads, to pay down the RBS debt.

“Every bank I did business with changed the rules,” Osborne said. “All my loans were current, I never missed payments and the banks are all calling the loans.”

According to Osborne, several of his lenders changed loan terms, and others hiked interest rates.

“I made all my money off of borrowing money off of banks and paying them back, and when they got in trouble, I wasn't in trouble,” Osborne said. “They put me in trouble.

“They're thieves,” he added. “They think they're above the law.”

When asked for comment on matters relating to Osborne, representatives for RBS Citizens Financial Group and Fifth Third Bank said the banks do not comment on litigation. Inquiries sent to a few other institutions Osborne named were not answered by Crain's deadline last Friday, April 25.

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